Massachusetts lawmakers mull oversight of ailing colleges

BOSTON — The Legislature’s Joint Committee on Higher Education met Monday for a hearing on several bills that would increase the state’s monitoring of financially struggling colleges and universities.

The hearing comes amid a spate of college closures and mergers in Massachusetts and across the region, with experts predicting even more turmoil ahead. In particular, the abrupt closure last year of Mount Ida College in Newton has led lawmakers to consider strengthening oversight of private colleges after that school’s students were thrown into academic uncertainty and their employees into unemployment.

“This administration recognizes that Massachusetts’ reputation as the world’s education leader is dependent upon the continued success of its private colleges and universities,” Secretary of Education James Peyser said in oral testimony before the joint committee. “Nevertheless, no one can deny that higher education — both private and public — faces serious challenges.”

The challenges include a projected decline in the number of college-aged students due to decreased birth rates; increased competition; and ballooning tuition, fees and student debt. A July 2018 report from the ratings agency Moody’s Investors Service found that 20 percent of small private colleges face significant financial stress.

In western Massachusetts, those challenges have played out at Hampshire College, which announced earlier this year that it was seeking a “strategic partnership” to remain afloat, and that it would not accept a full class this fall. The college’s trustees have since changed course, voting to pursue independence. Last week, the school announced that 15 students have decided to attend this fall.

Peyser was speaking in support of a bill filed by Gov. Charlie Baker that would require any college or university facing the risk of closure to notify the state and prepare a contingency plan. The bill would also allow the state to request financial data from schools and would give the Board of Higher Education the ability to sanction a school that doesn’t turn over that data.

That bill, as well as two others meant to increase transparency in the state’s higher education sector, were the primary focus of Monday’s hearing. And two of the committee members with the most questions were part of the western Massachusetts delegation — state Sen. Jo Comerford, D-Northampton, and state Rep. Mindy Domb, D-Amherst.

The first to give testimony in support of the governor’s bill — “An Act to support improved financial stability in higher education,” also known as S.2183 — were Peyser and state Higher Education Commissioner Carlos Santiago.

Peyser said that he supports the bill because it safeguards confidentiality for private colleges turning over financial data, envisions using multiple indicators to judge a school’s fiscal state, establishes a predictable process, ensures the timeliness of information gathering and seeks collaboration with the region’s higher education accreditation agency — the New England Commission of Higher Education, or NECHE.

He stressed that the bill includes a public records exemption to ensure that “adverse financial data” is not made public through the state’s monitoring of a struggling college. Such disclosure, he said, could cause a school to close or act prematurely.

The state’s Department of Higher Education is crafting its own regulations in parallel with the governor’s legislation. Santiago gave details about those regulations, saying they allow the department to assess the past, present, future financial stability of an institution.

Over the last five years, Santiago said, the department has intervened in at least 18 situations when colleges or universities faced closures or mergers. But up until this point, its approach has been “totally reactive,” he said.

“We have to move from a reactive state to a proactive state,” Santiago said. “We have to be able to begin to better understand (schools’) plans to get out of the financial distress that they find themselves in.”

He said state education leaders need to determine how to measure a school’s level of financial troubles, and when to notify students and the public. He said it has become clear in talking to stakeholders and the presidents of around 30 of the state’s private colleges and universities that there is no one-size-fits-all metric.

Currently, if a private institution does not respond to the department’s request for financial information, Santiago said it has only two courses of action, both of which it considers a “nuclear option”: referring a school to the attorney general’s office or revoking its degree-granting authority.

“We have not used those options,” Santiago said, noting that in the new proposals there are provisions for both remedies and sanctions.

Santiago said the department hopes to roll out draft regulations at its June meeting, followed by a 30-day vetting period when it will be welcoming public comment.

Domb and Comerford were frequent questioners of those giving testimony.

Domb told the top education officials that she’s concerned that, in crafting new regulations, the state is not considering as stakeholders the cities and towns that are impacted by a college closing or shrinking. She also questioned the timing of holding public comment sessions in June when many college students and employees are out of town.

Comerford asked what financial indicators the state will be looking for that are not already requested by NECHE, the accrediting agency. Santiago mentioned everything from enrollment trends to information about how realistic a college’s plan is for selling land, for example.

Comerford also questioned whether the state has any role to play in preventing or mitigating a closure. “I don’t see our role as fundamentally saving an institution,” Santiago responded.

Laura DeVeau, who was the vice president of student affairs at Mount Ida College before it closed, spoke about the effects of job losses on a community that hosts a struggling college. She said that many of the employees she knows who were laid off from Mount Ida have either not found employment, are underemployed or have had to leave the higher education sector to find work.

Rich Doherty, president of the trade group lobbying on behalf of the state’s private colleges — the Association of Independent Colleges and Universities in Massachusetts, or AICUM — said his group’s members are not opposed to creating regulations after Mount Ida’s closure. But they must be created, he added, in a “responsible and focused manner” to avoid unintended consequences for the schools that are so important to the state’s “innovation economy.”

Specifically, Doherty said, he would prefer that NECHE review private colleges and universities rather than the state. He also said that AICUM was working with chief financial officers from a “diverse set of colleges and universities” to come up with an alternative for the state to consider. That “more comprehensive and holistic approach,” he said, would essentially be a dashboard of data with which NECHE could better monitor schools.

Doherty revealed that when factoring in contracted workers, around 500 people lost their jobs when Mount Ida closed — more than double the 280 faculty and staff often cited as having been laid off from the college.

Domb asked whether those kinds of employment numbers — contract workers making up about as much of the college’s workforce as faculty and staff — were consistent at other private colleges in the state. Doherty said that he didn’t want to extrapolate too far, but that it is probably accurate for the state’s smaller colleges.